Construction company revamps business strategy to increase profits.
"We were managing a $5-million company with systems fit for a $1-million one," says Clay Page of the market downturn his company, Co-op Building Consultants, in Corpus Christi, Tex., faced in 1989. So Page revamped the way his construction company tracks costs, schedules work, and trains employees.
The results? In just one year employees have become 40% more productive, with only a 6% rise in costs. And Page's business has increased by 10%. His strategy included
1. Tracking costs in small units. Page categorized construction tasks into 6,000 items (the average for his construction niche is 200), then entered them, along with the associated hourly cost for labor and materials, into a database. As a result he can calculate more accurate project estimates.
The company also provides employees with flowcharts diagramming the order of tasks and how long each should take. Employees note and report deviations from their flowchart estimates.
2. Holding quarterly wrap-up meetings. Page spends one day each quarter meeting with each of his six crews, sans supervisors, to discuss tasks that were 6% over or under budget. A supervisors' meeting, which Page does not attend, is also held. Beforehand, however, he does give supervisors a summary of his reactions to the past quarter's projects, including a list of problems to solve. Finally, at a 15-minute companywide meeting, information gleaned at each of the crew meetings is shared with everybody.
3. Sharing rewards with employees. Page pays employees hourly rates just below union rates and attaches a bonus to each project based on time and profitability targets. That usually brings his 36 employees' wages above the union rates. He also posts pay rates for different skills as an incentive for workers to build their expertise.
Employees have adapted to the new management system so well that Page has promoted from within for all supervisory positions. "This system isn't made for everyone," he says, "but it's perfect for the hard workers we want on our side." -- Teri Lammers